CMS Proposes Ban on Third-Party Vendor Payments for Remote Monitoring
A draft rule for 2027 would require clinical staff to be directly employed by practices to qualify for RPM and RTM reimbursement.
The Centers for Medicare and Medicaid Services (CMS) has proposed a draft rule for the CY2027 Physician Fee Schedule that would eliminate Medicare reimbursement for remote monitoring services provided by third-party vendors. If finalized, the policy would force a fundamental shift in how remote care is staffed and billed across the United States.
Under the proposal, effective January 1, 2027, remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM) services must be furnished by clinical staff directly employed by the billing practice to remain billable. CMS is driving this change based on concerns regarding program integrity, low-quality care, and the prevalence of fraud, waste, and abuse within the current reimbursement model.
Rapid Growth and Clinical Value
The move comes as remote monitoring has seen an aggressive expansion in adoption. Medicare payments for RPM rose 31% in a single year, climbing from $408 million in 2023 to $536 million in 2024. This financial growth mirrors a surge in patient utilization; nearly 1 million enrollees received RPM services in 2024, representing a 27% increase over the previous year.
Despite CMS's integrity concerns, clinical data suggests the model is effective for patient outcomes. A 2025 JMIR systematic review and meta-analysis found that RPM likely reduces hospitalizations and shortens the length of hospital stays, providing a clinical justification for the continued use of these technologies.
Impact on Rural and Small Practices
The proposal has triggered intense pushback from healthcare advocacy and technology groups. Critics argue that requiring direct employment of clinical staff removes the operational flexibility that allows smaller providers to scale these programs.
"We are deeply concerned that the effect of the proposed remote monitoring policies would be the loss of access to care for millions of Medicare beneficiaries, with particularly severe consequences for rural communities and patients served by small and independent practices," the Alliance for Connected Care stated.
ATA Action echoed these concerns, noting that the changes could make RPM and RTM "financially and operationally unworkable" for health systems and physician practices that currently rely on shared staffing or contracted arrangements to manage the technical and clinical overhead of remote monitoring.
Future Outlook
The industry is now watching to see if CMS will soften the employment requirement or provide exemptions for rural providers who cannot realistically hire full-time internal staff for these roles. While the clinical benefits of RPM are increasingly documented, the tension between federal fraud prevention and the operational realities of rural health infrastructure remains unresolved. The final rule will determine whether the current growth trajectory of remote monitoring continues or if the financial model collapses for the providers who need it most.